China Construction Bank to be first UK clearing bank for renminbi

Chinese Premier Li Keqiang expected to announce the deal when he visits London
next week

Britain's hope is that a London clearing bank would complement the main clearing infrastructure in Hong KongPhoto: AFP

By agencies

11:47PM BST 11 Jun 2014

China Construction Bank (CCB), China's second-largest lender, has been selected to become the first clearing service for renminbi trading in London, according to reports

The clearing bank will help secure London's position as a global centre for foreign exchange trading, as financial capitals around the world race to secure a slice of the fast-growing offshore yuan trade.

Chinese Premier Li Keqiang is expected to announce the deal when he visits London next week for an annual summit, a reciprocal visit following a trip by Prime Minister David Cameron to China last year.

CCB was selected despite initial expectations that local rival Bank of China was the likely choice, the Financial Times reported, adding that the decision had been made in Beijing, not London.

Britain and China signed an agreement last month to set the service up, days after Germany clinched a similar deal. China is a focus of the Government as it tries to boost the country's exports, including those from its powerful financial services industry.

Hong Kong is by far the largest centre for offshore yuan deposits, according to consultancy PwC. Deposits in Taiwan, Singapore and Macau also dwarf those in Luxembourg, Paris or London. New York lags far behind Europe.

Britain's hope is that a London clearing bank would complement the main clearing infrastructure in Hong Kong, easing the transfer of funds in the western time zone.